The government is cracking down on taxi drivers, mini-taxi drivers and scrap dealers with new tax avoidance checks to be introduced in April. HMRC will use the new checks to monitor workers in ‘high risk’ sectors for tax avoidance. According to accountants at UHY Hacker Young, an industry is considered high risk if it has a lot of cash or widespread use of cash.
The new measure will require taxi drivers, minicab drivers and scrap dealers to confirm to HMRC that they have paid their taxes in full or risk not having their licenses renewed.
From April 4, these workers will face prosecution and lose their livelihoods if they fail to pay tax or are found to have lied to HMRC. This decision will crack down on the so-called “hidden economy” in which people consciously or unconsciously participate.
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HMRC’s new “tactic of threatening the livelihoods of those in certain trades is a major shift in the way tax compliance is enforced in the UK,” said Phil Kinzett-Evans, partner at UHY Hacker Young .
The new system is expected to prevent £270m of tax avoidance over the next 5 years according to HMRC. Kinzett-Evans continued: ‘HMRC has racked up a whole host of new powers over the past decade, but the power to threaten people’s jobs is one of the most daunting.
He added: “This is a major new step in the way HMRC enforces tax compliance. Preventing people from working is something the tax administration should not take lightly.
The HMRC spokesman said AM City that the new policy aims to “create a level playing field for the compliant majority in these areas, so that the majority that plays by the rules is not disadvantaged by the minority that does not.”
“We know that people operating in the hidden economy may not be doing it deliberately, many people are doing it because they are unaware or unsure of their tax obligations,” he said. he said, calling the new policy “innovative, cost-effective and a simple way to tackle this part of the tax gap, preventing people from entering the hidden economy.
“We are working with industry bodies to make this as easy as possible. Verification should take a few minutes every few years and is just to confirm whether someone is tax registered or not,” he added.
“If the license applicant is already registered with HMRC if required, this will be a simple online check, taking a few minutes, usually once every three years.”
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